In Brief
Hindustan Lever Limited, a tea manufacturer, challenged entry tax assessments claiming packing materials qualified as taxable inputs/components entitled to a 1% tax rate instead of 2% under Karnataka's Entry Tax Act and relevant notifications. The Supreme Court held that packing materials are statutorily distinct from raw materials, component parts, and inputs—separately defined in Schedule I and taxed at different rates. The taxable event under entry tax is entry of goods into a local area, not marketability, unlike excise duty. Therefore, packing materials cannot be reclassified as inputs, and Explanation II to the 1998 notification does not extend the concessional 1% rate to packing materials. The appeal was dismissed.
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